IDAHO PUBLIC UTILITIES
COMMISSION

Case No. IPC-E-06-07, Order No.
30047

May 25, 2006

Contact: Gene Fadness (208)
334-0339

The Idaho Public Utilities Commission today approved a
reduction in the Power Cost Adjustment (PCA) for Idaho Power customers
effective June 1. The PCA portion of customer bills fluctuates yearly depending
on annual streamflows and market conditions.

Combined with the recently approved 3.2 percent increase in
the base rate and the expiration of a 2.2 percent tax adjustment, residential
customers will see an overall reduction of about 14 percent in their bills, or
a decrease of nearly 1 cent for every kWh used. The monthly bill of a
residential customer who uses 1,000 kWh per month would decrease from $64.49
per month to $55.44. The summer bill for that same customer will decrease from
$69.22 to $60.27.

Currently, the PCA surcharge adds about 0.6 cents per kWh to
all major customer class base rates. After June 1, customers will get a PCA
credit instead of a surcharge that will subtract 0.3689 cents per KWh from the
base rate. The overall (base and PCA credit) non-summer rate decreases from
6.02 cents per kWh to 5.05 cents. The overall residential summer rate will be
5.73 cents per kWh, down from 6.69 cents.

The reduction for commercial customers is 14.82 percent and
19.82 percent for industrial customers. Irrigation customers will see about an
18 percent reduction.

Customer bills are
divided into two components, the base rate and the PCA. The PCA is shown as a
surcharge or a credit on a customer bill and changes every spring to account
for Idaho Power’s above-normal or below-normal power supply costs. In Idaho
Power's territory, where about half its electricity is generated from
hydroelectric dams, streamflow levels largely determine power supply costs.
When streamflow levels are above normal the company doesn’t have to generate as
much power from more expensive coal or natural gas resources and does not have
to buy as much power on the wholesale market. A second factor in determining
the PCA is the cost of power on the wholesale market. When streamflows are
above normal and market conditions are normal, customers typically get a PCA
credit. When streamflows are below normal and Idaho Power must generate power
from more expensive thermal sources or buy more power on the wholesale market,
customers typically get a PCA surcharge.

This year, with Snake
River streamflows at 33 percent above the 30-year average, Idaho Power’s annual
power costs have decreased by $46.8 million, 90 percent of which is credited
back to customers. It represents the largest credit for customers since the PCA
mechanism was put into place in 1993. It is also the first time, after six
continuous years of drought conditions, that customers receive a credit rather
than a surcharge.

A
full text of the commission’s order, along with other documents related to this
case, are available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room”
and then on “Electric Cases” and scroll down to Case Number IPC-E-06-07.

Interested parties may petition the commission for
reconsideration by no later than June 15. Petitions for reconsideration must
set forth specifically why the petitioner contends that the order is
unreasonable, unlawful or erroneous. Petitions should include a statement of
the nature and quantity of evidence the petitioner will offer if reconsideration
is granted.

Petitions
can be delivered to the commission at 472 W. Washington St. in Boise, mailed to
P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.

History of Idaho Power PCA

(The PCA amount reflects how much power supply costs
exceeded or fell short of the amount of power supply costs the company had
included in base rates. For example, in 1993 the company spent $4.94 million
more on power supply than had been included in base rates. The 2001 and 2002
adjustments are the result of the Westwide energy crisis that included a record
high wholesale market prices on top of record drought conditions.)